Food Stamp and SNAP Fraud

Putting an End to Food Stamp and SNAP Fraud

The United States Supplemental Nutrition Assistance Program is referred to as SNAP. It has been established to provide food for the needy. The monetary benefit amount is individually decided and is based on the home’s income and the size of the family.

Strict laws are set up and enforced to limit abuse and to hinder the misuse of government funds, and the benefits are transferred electronically in an effort to curb fraud and to help the recipient.

EBT Card

The SNAP program provides participants with monetary food benefits each month through the Electronic Benefits Transfer (EBT) card. The EBT card looks and functions like a traditional debit card. But, SNAP benefits are not the same as monetary assistance.

The SNAP benefits that are on the EBT card are not for general spending and are not to be used to receive cash-back services. EBT cards are used to limit fraud. Read more about the EBT card anti-fraud benefits below under SNAP Rules and Regulations.

SNAP Application Process

SNAP applicants have been caught providing falsified documents and hiding income in order to qualify for SNAP or to get a larger monthly amount. Withholding proof of revenue or providing false information could result in arrests and jail time or fines.

Applicants must indicate the name, birth date and Social Security number for all family members and persons who are living in the home. Verification of incomes must be provided for each person residing in the household.

Expenses are also included in the review process, including proof of court-ordered child support that must be paid by a member of the household, proof of rent and mortgage and utility payments.

A mailed notice is sent to the applicant along with the eligibility determination and the possible monthly EBT benefit that will be received by the household. Appeal rights are included along with the decision letter.

SNAP Trafficking and Fraud

Food stamp fraud takes place in numerous ways. Some of the most common SNAP fraud is experienced in the following circumstances. Fraud occurs when SNAP benefits are exchanged for cash, which is called SNAP trafficking. Applicants falsify their income in order to qualify for SNAP benefits or a larger monthly allowance.

Fraud also occurs when unapproved items are purchased with SNAP benefits, or when cash is provided in exchange for the card or pin. Fraud also occurs when previously disqualified retailers, who have been removed from the retail program due to past abuse and application deception, lie on their application to requalify for the program.

SNAP Rules and Regulations

The United States Supplemental Nutrition Assistance Program (SNAP) is overseen by each state but is run on a national level by the government. SNAP Food stamp benefits are regulated by United States Code (7 U.S.C. Chapter 51) and the Code of Federal Regulations (7 C.F.R. §278). The United States Department of Agriculture (USDA) and the Food & Nutrition Service (FNS) are federal entities that oversee the SNAP benefits, enforce the regulations and run the program.

SNAP rules and regulations are guidelines that ensure that needy households in the US have the basic foods that are needed. Violations of SNAP rules and regulations are counteractive to the goals and purpose of the program, and these regulations should be strictly adhered to. Any violations should be taken seriously.

SNAP fraud has dropped dramatically because of increased oversight and improvements that have been made in the program management by the USDA.

The SNAP electronic benefits transfer provides the USDA with tools that are used to identify, track, and take action against SNAP trafficking. An electronic audit trail is obtained from EBT transactions, which is utilized by the USDA and FNS to identify trafficking and suspicious activity.

An Anti-Fraud Locator is used to monitor EBT Retailer Transactions. The ALERT system monitors electronic transactions and SNAP activity to determine suspicious stores, which are then examined more closely in an analysis and investigation process.

FNS Actively Investigates Retailer Fraud

The Food and Nutrition Service (FNS) has appointed a team with more than 100 analysts and investigators across the US that are dedicated to ensuring SNAP retailer compliance and conducting anti-trafficking operations. The FNS analyzes retailer data and conducts undercover investigations.

They also process cases and initiate fines and administrative disqualifications against any violating retailers. The FNS works with state law enforcement to offer SNAP benefits for use in sting operations to support anti-trafficking. The government is actively seeking to end Food Stamp Fraud.

The federal government seeks to prosecute those who violate SNAP regulations. In 2012 alone, the FNS investigators examined more than 15,000 stores for fraud and completed nearly 4,500 undercover SNAP investigations.

As a result, 1,400 stores were permanently disqualified for SNAP, and nearly 700 were sanctioned for SNAP violations, including selling ineligible items.

Intentional Program Violations

SNAP trafficking is the most common intentional program violation that takes place in the food stamp program. It involves selling SNAP benefits to obtain cash or unapproved products.

Trafficking may occur between SNAP recipients and SNAP retailers or an individual outside of the program. Trafficking can involve selling the EBT card or PIN number to a person or to a retailer. This is a method that some SNAP recipients use to receive cash as payment for SNAP benefits. This is illegal.

Trafficking may allow the recipient to pocket cash or to purchase non-food items, but recipients who engage in trafficking can face criminal penalties. The penalty will depend on the amount of money involved in the trafficking fraud, and they can range from one to 20 years in prison and fines ranging from 5,000 and 250,000 dollars.

Trafficking is categorized as an intentional program violation (IPV), and the penalty may include permanent disqualification of the recipient and their household from receiving SNAP benefits. They could also lose benefits for 12 or 24 months. The length of the SNAP disqualification will be based on the number of any prior intentional program violations.

If SNAP recipients sell benefits to receive illegal items, such as weapons, ammunition or drugs, the recipient will be permanently disqualified from receiving SNAP. Beneficiaries who participate in SNAP trafficking may also be required to repay the government the cash or other value that they received.

Trafficking retailers have been caught using EBT cards to stock their inventory for resale. When someone is caught trafficking SNAP benefits, it can jeopardize their participation in the program, or the Food Nutrition Service (FNS) or the state may impose a civil monetary penalty. Stores and SNAP recipients that participate in SNAP trafficking may face criminal prosecution.

Purchasing Ineligible Items

According to the Federal law, SNAP benefits are only to be used for the purchase of food items. The program is not designed to handle the recipient’s entire bill. It is only intended to assist the family in buying food, and the EBT card can’t be used to purchase cigarettes, alcohol or medicine.

SNAP funds can not be used to purchase personal care items, such as toilet paper, cosmetics, soap or shampoo. Household products, including cleaners, laundry detergent, paper products and vitamins are not permitted.

SNAP benefits can be used to purchase subs and cold deli items, but deli foods, such as fried chicken, soup and rotisserie chicken, are not approved.

Requesting excessive replacement cards could indicate that the individual is exchanging SNAP cards for cash or ineligible items. USDA has established an EBT replacement card rule, which gives individual states the option to require SNAP recipients who have made an excessive number of requests, within one year, for EBT card replacements to make contact with the state.

This rule will provide states with the opportunity to determine whether the individual’s request for a new card is legitimate, or if further investigation should be required.

How to Report SNAP Fraud

SNAP has one of the lowest fraud rates among Federal programs, and the USDA is continuing to take positive steps to improve SNAP and to reduce fraud. Declines in SNAP trafficking have been achieved in last two decades, and the rate has dropped from four cents on the dollar to one percent, according to the USDA.

No amount of SNAP fraud is acceptable, and it will not be tolerated. Critics voice claims that groups of welfare recipients are stealing from taxpayers by claiming benefits that they do not legitimately qualify for or by selling SNAP benefits to purchase non-food items, such as drugs or guns.

Arrests continue to take place, such as the 2.4 million dollar Food Stamp Scheme that was exposed in Southern Florida in 2016. However, it is important to point out that despite the political cry about SNAP abuse, the system has experienced significant reform.

The USDA continues to crack down on individuals and businesses that are violating the program and are misusing taxpayer dollars. Fraud is an issue that is being confronted by the United States Department of Agriculture, and you are encouraged to report fraud to your state when you see it.

Program integrity and improved stewardship of Federal money will continue to take place as we reduce recipient and retailer fraud and as the USDA works to ensure accurate eligibility and a reduction in improper payments. Call (800) 424-9121 to Report suspicious SNAP use (including retailer fraud) to the USDA Office of the Inspector General.